Senate Bill S3026

                                 BILL NUMBER:  S3026

 TITLE OF BILL :

An act to amend the navigation law, in relation to the lien priority
of liens of the New York environmental protection and spill
compensation fund


 PURPOSE :

To amend the Navigation Law to raise the lien priority of the New York
Environmental Protection and Spill Compensation Fund above all other
lien holders except certain mortgages, taxing authorities, the state
of New York or a public benefit corporation thereof.

 SUMMARY OF PROVISIONS :

Section 1 amends subdivision 4 of section 181-a ("Environmental lien")
of the Navigation Law to establish that the New York Environmental
Protection and Spill Compensation Fund shall have lien priority above
all other lien holders except mortgages whose interest is perfected
before a lien notice has been filed and liens for taxes on the real
property in favor of any assessing unit, school district, special
district, county or other taxing unit.

              

Section 1 also adds a subdivision 5 to section 181-a ("Environmental
lien") of the Navigation Law providing that if execution upon a
judgment for the recovery of the expenses of any such cleanup and
removal costs and damage costs incurred by the New York Environmental
Protection and Spill Compensation Fund is returned wholly or partially
unsatisfied, such judgment, if docketed in the place and manner
required by law to make a judgment of a court of record a lien upon
real property and a copy is delivered to the department of audit and
control, shall be a lien upon such premises and shall have preference
over any and all other liens and encumbrances except any:  (a) prior
recorded mortgage; and (b) other encumbrance for the benefit of the
state of New York or a public benefit corporation thereof.

Section 2 provides for an effective date of immediately and
establishes that this Act shall apply to liens perfected on and after
such date.

 BACKGROUND AND JUSTIFICATION :

The Environmental Protection and Spill Compensation Fund ("Fund") has
been created in the custody of the State Comptroller. The Fund is
administered by an Administrator appointed by the Comptroller. The
Administrator's duties include disbursing monies from the Fund for
cleanup and removal costs certified by the Commissioner of
Environmental Conservation, representing the State in negotiations
with alleged dischargers to recover costs incurred by the Fund to
cleanup spills and satisfying claims for damages.

Under current law, the Fund is able to place an environmental lien on
a parcel of property where an oil spill occurred if the owner of the
property is a party liable to the Fund for costs of cleanup and claims
for damages. Any such environmental lien placed on property remains
until the claim or judgment is satisfied or becomes unenforceable,
released by the Administrator, discharged by payment of amounts owed
into court or otherwise vacated by court order.  Currently,
environmental liens are subordinate to the rights of other lien
holders whose interests are perfected prior to the filing of the
environmental lien. Upon sale of such property, liens are paid in the
order of priority. Unfortunately, spill properties are often
foreclosed and there are not sufficient funds from the sale to pay the
Fund. This legislation would move up the priority of such liens and
would help prevent the disposal of such property without satisfaction
of the Fund's claims.